County Commissioners say fairgrounds zone would hurt county finances

Sept 18, 2013 - Design Shop Architect Scott Guidry measures where a sidewalk will be built around a new barn-style classroom under construction at the Children's Museum of Memphis. The museum is one of numerous properties inside a proposed Tourism Development Zone in Memphis which includes the Midsouth Fairgrounds, Liberty Bowl, Midsouth Coliseum, Tobey Park and other sites throughout Midtown. (Brandon Dill/Special to The Commercial Appeal)

Steve Basar

County Commission members said Wednesday the proposed Tourism Development Zone at the Mid-South Fairgrounds site would compromise future funding for the county, specifically Shelby County Schools.

Commissioner Steve Basar made a presentation to the commission's tourism committee after attending a neighborhood meeting Tuesday about the fairgrounds project.

"The biggest thing is the TDZ is going to reduce the funds available for Shelby County Schools, and by my estimate, it's a million dollars per year for 30 years," Basar said. "It's not an insignificant amount of money."

County officials weren't prepared to confirm his figures, but agreed that TDZs divert sales taxes.

"I have not looked at the details of this thoroughly enough to give you a definite answer, but in the existing TDZ today, it covers both the state sales tax and the local option sales tax," said Mike Swift, county finance director. "To the extent that it would impact the local option sales tax, half of that off the top goes to schools, and therefore it would be a reduction in what goes to schools."

Under TDZs, existing sales tax revenues are retained, while any increase in the revenues is used to pay for the zoned project, Swift said.

For example, if a zone generates $5 million in sales taxes before the TDZ is set, and $5.2 million afterward, that $200,000 difference goes to the TDZ, he said.

The boundaries for the proposed fairgrounds zone are North Parkway on the north, Southern on the south, Belvedere to the west and Flicker to the east, and include the Memphis Zoo as well as the dense entertainment districts of Overton Square and Cooper-Young.

It also includes the Union Avenue Kroger, which will soon be renovated and expanded.

"The geographic area for this project is also suspect," Basar said. "They gerrymandered the zoo. They gerrymandered Overton Square. They gerrymandered in Cooper-Young."

All are areas outside the proposed fairgrounds project, Basar said.

This isn't the only project commissioners should be worried about, Commissioner Mike Ritz said, noting that Downtown sales taxes have been committed to pay off bonds associated with the Bass Pro Shops conversion of the Pyramid.

"One of the things I think we need to be real concerned about is, we've got to fund the schools and health care and jails of this community," he said. "Every time we suck off future tax revenues and dedicate them to something else, they're not available for that."

The administration of Memphis Mayor A C Wharton proposed the fairgrounds development. Wharton has said it's a project that will support the city's financial health.

"This is consistent with what we've always said," Wharton said. "We're not going to be able to cut (costs to bring) our city into prosperity. We're not going to be able to tax ourselves into prosperity, but we can certainly grow our city into prosperity."